The role of information integration in facilitating 21st century supply chains: a theory-based perspective

Transportation Journal, Spring, 2008 by Cheri Speier, Diane Mollenkopf, Theodore P. Stank

Beyond the challenges of obtaining supply chain performance benefits from information sharing across all contexts, there are also relationship factors that may lead to unexpected performance outcomes. For example, a supply chain orientation encourages abandonment of the coercive use of power and a places a greater emphasis on trust and relationship commitment between supply chain partners (Johnston et al. 2004). However, the number of firms using information systems to conduct reverse auctions to procure goods and services has increased dramatically over recent years; approximately 25 percent of all firms and almost 45 percent of all large firms are using Internet-enabled reverse auctions to facilitate the procurement process (Anonymous 2003). The significant driver of reverse auctions relates to cost savings, yet these reverse auctions may also undermine trust developed during longstanding supplier relationships (Emiliani and Stec 2002; Jap 1999, 2000; Smeltzer and Carr 2002).

The preceding narrative highlights the inconsistencies and subtleties that exist when conceptualizing the use of information systems to foster the adoption of supply chain management tenets. The purpose of this article is to develop a theory-based framework to guide both practitioners and researchers in understanding the role of information systems in supporting integration within the supply chain that facilitates a broader understanding of such inconsistencies. Specifically, we extend the strategy-structure-performance paradigm to the supply chain level and position information integration within the realm of supply chain management. The resulting framework may be used as a foundation to guide the evolution of future research and practice.

A caveat before proceeding: There are so many information system/supply chain buzz words (e.g., ERP, APS, CPFR, B2B, POS, etc.) that it is difficult for practitioners and researchers to understand the acronyms and keep track of the differences between systems. In addition, the different systems are not mutually exclusive--some versions of APS, for example, overlap with some versions of CPFR (Edwards et al. 2001). Our purpose is not to focus on the "information system" per se, as each system type will provide specific capabilities, depending on how an organization has implemented it. Rather, we focus on information integration within and between supply chain partners as an enabler of business processes to understand the role of information systems in supply chain initiatives. This is an important distinction from existing work in this area as it allows for consistent comparisons regarding how similar business processes are leveraged by integrating information systems across supply chain partners.

LITERATURE BASE

Determining how organizations invest scarce resources to achieve objectives that establish and maintain superior competitive position or advantage is at the heart of strategy development (Day 1994). Traditionally, the key to competitive advantage involved the choice of where to compete, and defending market share in these segments using price and product performance attributes. Strategic thought, however, considers competition a "war of movement" that depends upon anticipating market trends and changes in customer needs (Stalk et al. 1992). Competitive advantage results from implementing value-creating strategies that are not currently implemented by competitors (Barney 1991). Such strategies involve leveraging superior competencies to create customer value and achieve cost and/or differentiation advantages, resulting in market share and profitability performance (Day and Wensley 1988; Prahalad and Hamel 1990b). The advantage becomes sustainable when other firms are unable to duplicate benefits that are perceived and valued by customers (Coyne 1986; Day and Wensley 1988). Firms may set up barriers that make imitation difficult by continually investing to sustain or improve the advantage. In an ever-changing global marketplace, firms must be nimble and exercise strategic flexibility toward global markets as they try to accomplish this (Barney et al. 2001). Nimble competitors learn to constantly adapt their offers, processes, and sometimes even their entire business models (e.g., orientations) to capitalize on evolving opportunities and maintain their competitive advantage (Cavusgil et al. 2004).